By Joanne Gardner
Before shutting the doors of your business for the last time, it’s important to know how to liquidate your business assets so that you will recover the maximum amount possible. The following is a quick overview of the steps involved in liquidating assets.
1. Don’t do anything without professional advice.
If your liquidation involves formal insolvency, you’ll need the services of an Insolvency Practitioner (IP) to help draw up a liquidation plan. Your plan will need to be accepted by a majority of your remaining creditors before the liquidation process can begin. Note: Selling off assets without acquiring consent beforehand will get you in legal hot water.
2. Draw up an inventory.
Prior to disposing of any assets, you should carefully document everything that you have. Take photos of all tangible assets such as buildings, equipment, furniture, and vehicles, and include descriptions as well as serial numbers if available. You will need this information to help you keep track of your assets during the liquidation process and to ensure that nothing is stolen or goes missing. Documenting your inventory is also essential to satisfy the tax authorities as well as any creditors who may want confirmation of your assets before dispose of them.
In addition to your material assets, you will also need to consider the potential worth of any intangible assets. Customer lists, patents, business trademarks, licenses, permits, and anything else that adds value to your business are assets that you may be able to sell to similar businesses or interested parties.
3. Consider what to sell and what not to sell.
Not all your assets will be worth selling and you might be better off donating any inventory or furniture that’s not in sellable condition. Donating low-value items will also get you a tax break when it comes to filing your returns.
If you have items on credit or leased with an option to buy, determine whether it makes more sense to have the items repossessed or to buy them outright and resell them. If you’ve already made a lot of payments, you can probably recover more money by reselling the items yourself.
4. Assess your assets’ value.
You can work out the liquidation value of any remaining assets by attending liquidation sale auctions or by visiting similar online sites. For your intangible assets, contacting interested parties directly may yield better results. If you have a lot of assets to sell, consider hiring a qualified appraiser or a dedicated liquidation company to handle everything for you.
5. Consider the best type of sale.
Choosing the most appropriate way to sell your assets will also make a big difference in their final worth. Internet sales have become increasingly popular and will help minimize costs, but public auctions might also be an appropriate route. “Closing Down Sales” are best for everyday consumer goods. Finally, don’t forget to advertise your sale in advance and choose the most suitable day for prospective buyers in order to make the most of your liquidation sale.